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Stock Market Update Tuesday June 18, 2024

Stock Market Update Tuesday June 18, 2024 Stocks finished 0.25% to the good on the S&P 500 thanks to the latest semiconductor levitation, though the Nasdaq 100 barely managed to eke out a green finish.

Away From Stocks: Treasury's enjoyed a solid bid with the two-year yield slipping to 4.69% from 4.75% and the long bond declining four basis points to 4.36%, while WTI crude rose to near $81 a barrel and gold advanced to $2,329 per ounce.  Bitcoin slumped below $65,000 to mark fresh one-month lows and the VIX remained near 12. 

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Retail sales figures undershot consensus estimates, with downward revisions to prior data further amplifying bearish sentiment. This precipitated a reversal in the bond market, while equities remained largely range-bound by midday. The data corroborates recent signals of easing inflationary pressure and nascent weakness in the labor market.

Interest rate swaps pricing indicates a September rate cut remains likely, with 16.5 basis points priced in, notwithstanding the Federal Reserve's dot plot projection of a single cut last week. With three months of data outstanding and the US economy exhibiting signs of rapid deceleration, the labor market may be nearing an inflection point.

Post-holiday data on jobless claims and housing starts may offer additional clarity. Should both figures deteriorate, the 10-year US Treasury yield could breach the 4.196% support level and potentially retrace to 4.038%. This scenario would be bullish for markets. However, this week's options expiration, particularly in SPY and QQQ, reveals an unprecedented $13 billion net in-the-money call premium that will expire on Friday June 21, 2024. Investors should be wary of a sudden, unexpected downside move in the near term, driven primarily by options dynamics.

Sell Alert Tuesday June 18 2024


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